Steel and iron ore business Arrium announced this morning that it has appointed Grant Thornton as administrators.
“After considering the available alternatives, in the current circumstances it has become clear to the board of Arrium that it has, unfortunately, been left with no option than to place the relevant companies into voluntary administration in order to protect the interests of stakeholders,” it said in a statement to the ASX.
The ABC reports that Arrium owes its bankers $2.8 billion, trade creditors $1 billion and employees $500 million in entitlements.
Arrium, which split from BHP Billiton in 2000 as OneSteel, employs 7,000 in Australia, and over 1,000 at its Whyalla steelworks.
The fate of the steelworks has been in question for some time. Arrium announced in February that it was considering putting the plant and the company’s iron ore operations in care and maintenance.
Speculation about the company’s future intensified earlier this week when Arrium’s lending syndicate rejected a recapitalisation plan from vulture fund GSO Capital. This would’ve seen lenders lose 50 cents in the dollar.
It borrowed heavily to expand, buying up iron ore mines near the ore market’s peak
The management has been blamed for the company’s situation, including by industry minister Christopher Pyne.
“If there is anybody that needs to look at themselves, it’s the Arrium management, not the banks,” Business Spectator reports him as saying.
“Arrium has a $2bn debt. That is a problem for Arrium, incurred by Arrium management. It is no fault of the workers of Whyalla and it’s no fault of the state or commonwealth governments.”